Market-conscious Dutchies : Transplanting a Canadian financial incentive to the Netherlands

Market-conscious Dutchies

Transplanting a Canadian financial incentive to the Netherlands

Sanne Bonekamp (s3047024)

Master thesis Spatial Planning

Nijmegen School of Management

Radboud University Nijmegen

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Market-conscious Dutchies

Transplanting a Canadian financial incentive to the Netherlands.

Author: Sanne Bonekamp

Supervisor: Prof. Dr. E. van der Krabben

Date: August, 2014

Master Thesis Spatial Planning

Nijmegen School of Management

Radboud University Nijmegen

August 31

2014

‘Every country has problems, and each think that its problems are unique.

However, problems that are unique to one country are abnormal confronted

I

Preface

That’s it! After five years I am supposed to know enough about planning to get a real job. But if there is one thing, or actually two things, I’ve learned during those five wonderful years is that you are never done learning. And the second, of course is that time goes way to fast, especially when you’re having fun. Before I went to Canada, my neighbour gave me a present with a little note what said: look around and try to find the meaning of the things in your surroundings. And I think that is one of the essential points of planning. Planning is everything, everywhere at every time. And it is exactly that, that has shaped my view of the world.

The people at my working place inspired me to continue working on my thesis. They all have different backgrounds and told me about the Ontario planning system from their own background and experiences. I want to thank Richard, Larry and Frank for sharing their knowledge and experiences with me. Another person that inspired me is Rebecca Condon, who is the only (!) coordinator of the TIEG system in the City of Toronto. She encouraged me with her enthusiasm and her devotion to her job. She is exactly the planner I want to become in the next few years or maybe decades.

Thank you all for your support, even if it was from across the ocean. That support was the most precious to me.

August 31st, 2014

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Table of Contents

Preface ... I

List of figures and tables ... V

Summary ... VI

Samenvatting ... IX

Chapter 1 Introduction ... 1

1.1 Market-conscious planning ... 3

1.2 Research goal and question ... 5

1.2.1 Research goal ... 5

1.2.2 Research questions and research model ... 6

1.3 Theoretical and methodological framework ... 7

1.4 Social and scientific relevance ... 8

Chapter 2 Theoretical framework ... 9

2.1 Institutions ... 9

2.2 Institutional transplantation ... 10

2.2.1 What is transferred and why? ... 10

2.2.2 How is policy transferred and from where? ... 11

2.3 Successful transplantation ... 12

2.3.1 Transferability ... 12

2.3.2 Adaptability ... 13

2.3.3 Suitability ... 14

2.4 Transplantation failure ... 15

2.5 Institutional transplantation in this research ... 15

2.6 Conceptual model ... 15

Chapter 3 Methodological framework ... 18

3.1 Operationalization ... 18

3.1.1 Transferability ... 18

3.1.2 Suitability ... 18

3.1.3 Adaptability ... 19

3.1.4 Externalities ... 19

3.2 Research methodology ... 19

3.2.1 Case study research... 19

III

3.2.3 Generalizability ... 21

3.2.4 Triangulation ... 21

3.3 Interviews ... 22

3.3.1 Experts in the Province of Ontario, Canada ... 22

3.3.2 Experts in the Netherlands ... 23

3.3.3 Interview guides ... 24

3.3.4 Transcription of the interviews ... 24

3.4 Case study area ... 25

Chapter 4 Planning in Ontario ... 26

4.1 Planning in Ontario ... 26

4.1.1 History ... 27

4.1.2 General planning ... 28

4.1.3 The Ontario Municipal Board ... 29

4.2 Area development ... 30

4.2.1 Community Improvement Plans ... 31

4.2.2 Financial incentives ... 32

4.3 Tax Increment Equivalent Grants ... 34

4.3.1 Eligibility ... 35

4.3.2 How the TIEG system works ... 36

4.3.3 The IMIT program in Toronto ... 37

4.3.4 Example of the working of TIEGs ... 38

Chapter 5 Transplantation of Tax Increment Equivalent Grants ... 40

5.1 Transferability: pros and cons ... 40

5.1.1 Disadvantages (Cons) ... 40

5.1.2 Advantages (Pros)... 43

5.1.3 Analysis of the (dis)advantages ... 45

5.1.4 Conclusions ... 47

5.2 Suitability: similarities and differences ... 48

5.2.1 History and politics ... 48

5.2.2 Planning objectives... 49

5.2.3 Brownfield policies ... 51

5.2.4 Legislation ... 53

IV

5.3 Adaptability: opportunities, barriers and consequences ... 55

5.3.1 Opportunities ... 56

5.3.2 Barriers ... 59

5.3.3 Conditions and consequences ... 62

5.3.4 Conclusions ... 63

5.4 Overview of the analysis ... 64

Chapter 6 Conclusions ... 67

6.1 Recap of the research ... 67

6.2 Conclusion ... 67

6.3 The TIEG system in the Netherlands ... 69

6.4 Reflection ... 70

References ... 73

Appendices ... 82

Appendix A: Interview list ... 83

Appendix B1: Interview guide university professors and academics in Ontario ... 86

Appendix B2: Interview guides governmental institutions in Ontario ... 87

Appendix B3: Interview guide TIEG-funded projects in Ontario ... 89

Appendix B4: Interview guide university professors and academics in the Netherlands ... 90

Appendix B5: Interview guide expert in the working field in the Netherlands ... 92

V

List of figures and tables

Figures:

Figure 1. Differences in integral and incremental area development in the Netherlands (After:

Buitelaar et al., 2012) ... Error! Bookmark not defined. Figure 2. Research model ... Error! Bookmark not defined. Figure 3. Conceptual model ... Error! Bookmark not defined. Figure 4. Grant percentages per year (OMMAH, 2000) ... Error! Bookmark not defined. Figure 5. Grant payment per year (OMMAH, 2000) ... Error! Bookmark not defined.

Tables:

Table 1. Codes of the variables and sub variables ... Error! Bookmark not defined. Table 2. Examples of scenario’s which are eligible for financial incentives (After: OMMAH, 2007)Error! Bookmark not defined.

Table 3. Number of Ontario municipalities offering various brownfield financial incentive programs within a CIP (OMMAH, 2010c) ... Error! Bookmark not defined.

Table 4. Weighed negative aspects of the TIEG system ... - 45 -

Table 5. Weighed positive aspects of the TIEG system ... - 46 -

Table 6. Total score negative aspects ... - 47 -

VI

Summary

Nowadays many municipalities play a more passive, ‘facilitating’ role in land development, and they rely mainly on public law instruments such as the land use plan and building permits. Where municipalities previously had nearly everything under their own control, they now find themselves obliged to cooperate with private developers. Due to lower demand and shortages in land development costs, municipalities were more or less forced to switch to ‘Area development 2.0’. With this new way of land development, it is no longer about involving citizens but about giving space and connecting societal initiatives.

Due to the economic crisis, the Dutch public land development model started to show shortcomings. There is a need for effective and smart development strategies that help to take away present obstacles to real estate development and invite the private sector to invest again in urban transformation and renewal. The Canadian TIEG system could be an interesting mechanism for the Netherlands. This different approach to funding brownfield regeneration projects will be analyzed to see what effects this system has and if such an approach would be a solution for the problems the Dutch government faces. The goal of this research is therefore the following:

“To explore a different kind of approach to the funding of brownfield regeneration projects, namely the Canadian Tax Increment Equivalent Grants, to investigate if such an approach is applicable in the Netherlands and if it could solve the Dutch problems to fund regeneration projects.”

And the associated main question is:

“Could the Canadian TIEG system be used as a financing instrument in the Dutch invitation planning and what problems would it solve? “

The theory about institutional transplantation, or in other words policy transfer, is used in this research to analyze if the TIEG system is suited to be transplanted, and if the system would fit in the receiving country, in this case, the Netherlands. Eventually the theory is used to set out the amount of success the transplantation can have. This will be done with the help of three sub variables, namely the transferability of the system, the adaptability of the receiving country and the suitability of the receiving country to adopt the system.

This research contains case study research, that will be done in the Province of Ontario, where the TIEG system is invented in the beginning of the new era. The city of Toronto will function as a case study. Toronto’s TIEG system is called the IMIT program. IMIT stands for Imagination, Manufacturing,

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Innovation and Technology and is the city's premier business incentive program. In total, ten interviews are held. Six in Toronto and four in the Netherlands. The interviews in Toronto are held amongst university professors and academics, governments and projects that are funded with TIEGs. In the Netherlands two university professors are interviewed and two expert from the work field are interviewed. One expert from the market perspective, another expert from a governmental perspective. The figure below shows the researched variables and their sub variables.

The analysis showed that the TIEG system is a good working financial incentive in Ontario. The system has been reviewed in 2012 and it’s been proven successful. Although there are some constraints. For example that the incentive is an individual ‘bonusing’ subsidy and the question if the incentive is a true incentive or a reward. Most of the development since the start of the incentive, however, has moved to the downtown area. And most of the projects that have been realized, within the targeted sectors, have used the IMIT program to fund their projects. In the end the TIEG system is a stimulating and rewarding tool that brings extra development into the existing areas.

The analysis of the suitability showed that both countries are quite similar as it comes down to the measured sub variables. In both countries planning gets more decentralized and governments transfer their risks to private parties and both countries focus on redevelopment and support urban development to stimulate brownfield initiatives. Differences are that Ontario still focuses on growth, and focus on the place where development should take place. The Dutch focus on how planning objectives should be reached by focusing on market conscious planning and invitation planning. Brownfield policies in Ontario and the Netherlands differ at first sight, but when taking a closer look, they both aim for the same goal; intensification and market-oriented planning.

The analysis of the variable adaptability showed that the TIEG system could be an enrichment of the Dutch toolbox for redevelopment incentives. The TIEG system could give private parties that little push they need to reach their target. The success of the system therefore depends on the size of the financial trigger a municipality can offer. As a stand-alone tool TIEG doesn’t have a lot of opportunities, mostly due to tax differences compared to Ontario. This is one of the main barriers of Transferability Adaptability Suitability Externalities

Context and other variables

Advantages Opportunities History and politics

Disadvantages Barriers Planning objectives

Conditions and consequences

Brownfield policies

VIII

successful transplantation. The structure of the TIEG has to be changed in order to be able to provide an incentive that convinces developers to invest in redevelopment.

When looking at similarities between Canada and the Netherlands, both countries seem to have enough similarities to make successful transplantation possible. The shift towards invitation planning in the Netherlands contributes to the global shift in decentralization of planning objectives and is a perfect base for the TIEG system to be implemented. However, transplanting the system in its Ontario shape isn’t possible due to the difference in property taxes. The Dutch property tax is too low to offer a grant that is high enough to get private parties to invest in redevelopment. The biggest problem the TIEG system solves is that it steps into the vacuum of suitable financing structures for the new way of planning in the Netherlands. The TIEG system steps into this gap by providing invitation planning with a financial instrument to meet developers in their financial struggle to redevelop areas.

In conclusion the TIEG system could be an enrichment of the Dutch toolbox for redevelopment incentives. Although some changes are needed to be able to legally implement the TIEG system. In particular legislation on spatial planning and (property) taxes have to be adjusted in order to implement the TIEG system. And the main problem that should be tackled is the difference in property taxes. So how is the grant given to the developer if there is no possibility to do it through the property taxes (‘Onroerende Zaak Belasting’).

IX

Samenvatting

In deze tijd spelen gemeenten een passievere, faciliterende rol en vallen ze met name terug op publieke instrumenten als het bestemmingsplan en omgevingsvergunningen. Waar gemeenten voorheen veel zelf deden in gebiedsontwikkeling, zien ze zichzelf nu genoodzaakt om samen te werken met ontwikkelaars. Vanwege lagere vraag en tekorten in ontwikkelingskosten zijn gemeenten gedwongen te switchen naar Gebiedsontwikkeling 2.0. Bij deze nieuwe manier van gebiedsontwikkeling gaat het niet langer om het betrekken van burgers maar om het ruimte geven aan en samenbrengen van private initiatieven.

Vanwege de economische crisis begint het Nederlandse gebiedsontwikkelingsmodel scheurtjes te vertonen. Er is vraag naar nieuwe effectieve strategieën die helpen om huidige obstakels weg te nemen en die de private sector uitnodigen om te investeren in binnenstedelijke herontwikkeling. Het Canadese TIEG, Tax Increment Equivalent Grants, systeem is een goed voorbeeld van hoe financiering binnen de uitnodigingsplanologie vorm zou kunnen krijgen. Deze benadering van de financiering van herontwikkelingsprojecten wordt in dit onderzoek onder de loep genomen om te analyseren welke effecten dit instrument heeft en of een dergelijk instrument een oplossing biedt voor de problemen waar de overheden nu mee kampen. Het doel van dit onderzoek luidt als volgt:

“Een andere benadering van de financiering van herontwikkelingsprojecten, namelijk het Canadese Tax Increment Equivalent Grants systeem, analyseren, om te onderzoeken of een dergelijke benadering is toepasbaar in Nederland en of het de Nederlandse problematiek op het gebied van de financiering van herontwikkelingsprojecten kan oplossen.

De bijbehorende hoofdvraag luidt:

“Kan het Canadese TIEG systeem gebruikt worden als financieringsinstrument binnen de Nederlandse uitnodigingsplanologie en welke problemen zou dit oplossen?”

De theorie over Institutional transplantation, of met andere woorden, policy transfer, is gebruikt in dit onderzoek om te analyseren of het TIEG systeem is geschikt om te transplanteren en of het systeem zou passen in het ontvangende land, in dit geval Nederland. De theorie is gebruikt om de kans op succesvolle transplantatie in te schatten. Dit is gedaan aan de hand van drie sub variabelen, transplanteerbaarheid van het systeem, aanpassingsvermogen van het ontvangende land en de geschiktheid van het ontvangende land om het systeem te implementeren.

X

Dit onderzoek wordt uitgevoerd door middel van case study onderzoek, dat wordt gehouden in Ontario, een provincie in Canada. Hier is het TIEG systeem een aantal jaar geleden ontstaan. De stad Toronto dient als case study in dit onderzoek. Toronto heeft haar eigen TIEG systeem, namelijk het IMIT programma. IMIT staat voor Imagination, Manufacturing, Innovation en Technology en is de belangrijkste financieringssubsidie in Toronto. In totaal zijn er negen interviews gehouden. Zeven in Toronto en drie in Nederland. De interviews zijn gehouden onder professoren, academici, verschillende overheidslagen en experts uit de praktijk.

Het TIEG systeem is een goed werkend, relatief nieuw, financieringsinstrument uit Ontario, Canada. Omdat het systeem nieuw is (2008) is het nog niet vaak geëvalueerd. Hoewel uit de evaluatie van 2012 bleek dat het systeem succesvol is. Er zijn echter verschillende beperkingen aan het systeem. Bijvoorbeeld dat het systeem geïnterpreteerd kan worden als individuele belonende subsidie. daarnaast is het de vraag of het instrument een echte stimulans is of een beloning. Daarentegen heeft in Toronto de meeste ontwikkeling de laatste jaren plaatsgevonden in de bestaande stadsdelen. En de meeste projecten die sinds de invoering van het systeem zijn gerealiseerd hebben gebruik gemaakt van het TIEG systeem. In totaal is het TIEG systeem een motiverend instrument wat extra reuring en ontwikkeling brengt binnen de bestaande gebieden in een gemeente. Onderstaande figuur toont the onderzochte variabelen en bijbehorende sub variabelen.

De analyse laat zien dat het TIEG systeem in Toronto een goed werkend financieel instrument is. Het systeem is geëvalueerd in 2012 en is een bewezen succesvol systeem. Alhoewel zijn er een paar beperkingen. Bijvoorbeeld dat het instrument een individuele beloningssubsidie is en een andere beperking is de vraag of het instrument echt uitnodigt en stimuleert of alleen maar beloont. De meeste ontwikkelingen in Toronto daarentegen, zijn na de invoering van het systeem verschoven naar het centrumgebied en de meeste projecten die gerealiseerd zijn hebben gebruik gemaakt van het IMIT programma om hun projecten deels te financieren.

Transplanteerbaarheid Aanpassingsvermogen Geschiktheid Externaliteiten Context en andere variabelen

Voordelen Kansen Geschiedenis en politiek

Nadelen Barrières Planningsdoelen

Gevolgen en voorwaarden

Herontwikkelingsbeleid

XI

De analyse van de geschiktheid van Nederland om het instrument te ontvangen liet zien dat beide landen veel overeenkomsten hebben, gelet op de gemeten variabelen. In beide landen planning wordt gedecentraliseerd naar gemeenten en overheden verschuiven steeds meer verantwoordelijkheden en risico’s naar private partijen. Ook focussen beide partijen op herontwikkeling en stimuleren binnenstedelijke ontwikkelingen. Verschillen zijn dat in Ontario gefocust wordt op demografische en economische groei en op de plaats waar ontwikkelingen plaats zouden moeten vinden. Nederland focust op hoe planningsdoeleinden gerealiseerd moeten worden door te focussen op uitnodigingsplanologie en meer marktgerichte planning. Herontwikkelingsbeleid verschilt op het eerste oog in Ontario en Nederland, maar na nadere bestudering streven beide naar hetzelfde doel; intensivering van bestaande gebieden en meer marktgerichte planning.

De analyse van het aanpassingsvermogen laat zien dat de het TIEG systeem een aanvulling kan zijn op de Nederlandse toolbox van herontwikkelingsinstrumenten. Het TIEG systeem zou private partijen net dat financiële zetje in de rug kunnen geven wat ze nodig hebben om te kunnen ontwikkelen. Het succes van het TIEG systeem hangt dan ook af van de grootte van de financiële trigger die een gemeente kan bieden. Het systeem moet echter wel in samenhang met andere instrumenten gebruikt worden. Als een ‘losse tool’ heeft het TIEG systeem weinig kans van slagen, grotendeels vanwege hoogteverschillen in Onroerende Zaak Belasting (OZB). This is een van de grootste barrières voor succesvolle transplantatie. De structuur van het TIEG systeem moet aangepast worden aan Nederlandse context om een goed werkend instrument te bieden dat ontwikkelaars daadwerkelijk dat zetje in de rug kan geven om te investeren in herontwikkeling.

Kijkend naar overeenkomsten tussen Ontario en Nederland is te zien dat beide landen genoeg overeenkomsten hebben om succesvolle transplantatie mogelijk te maken. De verschuiving naar uitnodigingsplanologie in Nederland is in overeenstemming met de globale trend van decentralisatie van planningsdoelen en is een perfecte uitvalsbasis voor implementatie van het TIEG systeem. Hoewel, directe transplantatie van het systeem in zijn originele vorm is niet mogelijk vanwege de verschillen in OZB. De Nederlandse OZB is te laag om een financiële trigger te bieden die groot genoeg is om private partijen tot herontwikkeling te verleiden. Het grootste probleem wat het TIEG systeem kan oplossen is het financieringsvacuüm dat is ontstaan nadat de uitnodigingsplanologie zijn intrede deed. Het TIEG systeem vult het vacuüm door middel van het verstrekken van een financieel instrument, binnen de lijnen van uitnodigingsplanologie, om ontwikkelaars tegemoet te komen in hun financiële worsteling om een gebied aantrekkelijk te maken om te ontwikkelen.

Concluderend kan het TIEG system een aanvulling zijn op de Nederlandse toolbox voor herontwikkelingsinstrumenten. Hoewel enige veranderingen nodig zijn om het systeem legaal te implementeren in Nederland. Met name veranderingen in wetgeving zijn nodig om het TIEG systeem

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te implementeren in Nederland. Het grootste probleem dat opgelost zou moeten worden is het grote verschil in OZB. Nagedacht zou moeten worden over in welke vorm de subsidie verstrekt wordt als dat niet via de OZB gedaan kan worden.

1

Chapter 1 Introduction

During the 20th century the focus in area development in the Netherlands changed from active land policy to facilitating land policy. Until the eighties, active land policy was the dominant policy in area development. Municipalities bought all the land, provided the infrastructure and assumed all corresponding risks (Korthals Altes & Groetelaers, 2000). Nowadays many municipalities play a more passive, ‘facilitating’ role, and municipalities rely mainly on public law instruments such as the land use plan and building permits. Whereas municipalities previously had nearly everything under their own control, they now find themselves obliged to cooperate with private developers (Priemus and Louw, 2002). An increasing number of Dutch municipalities are seeking new formulae for area development in which private parties take over the financial risks and the responsibility for the implementation (Munoz Gielen, 2010; Van Baardewijk, De Haan and Hijmans, 2013).

Due to lower demand and shortages in land development costs, municipalities were more or less forced to switch to what Buitelaar et al. (2012) call ‘Area development 2.0’. With this new way of land development, it is no longer about involving citizens, it is instead about giving space and connecting societal initiatives. This asks for a shift from letting citizens participate to self-organization of citizens in urban redevelopment (Boonstra, 2012). Figure 1 gives an overview of the differences between the traditional area development and the relatively new ‘incremental area development’.

Figure 1 Differences in integral and incremental area development in the Netherlands (After: Buitelaar et al., 2012)

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The main pillars of area development 2.0 are invitation planning and incremental (piecemeal) development (Van Baardewijk, De Haan and Hijmans, 2013). However those two concepts are often used intertwined, they have a different meaning. With incremental area development the market is leading and the government facilitates development. This involves various relatively small (re)development projects, with an open-end process, without the use of a blueprint, where development and management are interconnected and a dominant role is played by the eventual users (Buitelaar et al., 2012). Invitation planning can be seen as a public-led way of incremental development. Since the start of the 21st century, municipalities started with invitation planning where municipalities try to provoke (invite) developers to invest and facilitate development (Groot Jebbink, 2012).

Incremental development and invitation planning ask for other ways of planning, communication but also financing structures (Lindemann & Schutten, 2012). The current system on cost recovery, for example, leans on existing initiatives that the municipality knows how to deal with. However since incremental development is a long lasting process that doesn’t forecast about the kind of projects that will be developed, the current land development system should be reconsidered (Buitelaar et al., 2012). This asks for a shift in thinking about funding redevelopment projects. Also because the national government is decentralizing tasks, including area development, but is not willing to give municipalities more money to do so, municipalities have to come up with new ideas to stimulate redevelopment (T. Stauttener, personal communication, July 15th, 2014).

Due to the economic crisis, the Dutch public land development model started to show shortcomings (Buitelaar, 2010). Banks stopped investing in area development because the assurance that the value of the property would increase after redevelopment decreased (T. Stauttener, personal communication, July 15th, 2014). Since the assurance of increment of property value is not a given fact anymore, banks are less likely to provide loans to developers. The crisis also caused a lower demand in houses by the consuming sector and decreased the chances for successful redevelopment projects. Choosing for redevelopment will in most cases result in financial shortages and the obligation to look for extra budget to fill in those shortages (van Hoek, Koning and Mulder, 2011). To cope with this reduction in chances, there is a need for effective and smart development strategies that help to take away present obstacles to real estate development and invite the private sector to invest again in urban transformation and renewal (Van der Krabben and Heurkens, 2014). Also there needs to be a tool that can step in the financing vacuum that has been created in the last few years to give a boost to the market of urban renewal.

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With the current movements in Dutch planning, especially looking at the financial vacuum that arose as a consequence of changing perspectives on land policy at the (re)redevelopment market, the Netherlands could use a financial tool that triggers more companies to invest in their property. In the current Dutch planning system the role of the private sector increases. Therefore experiences of other countries with private sector-led development strategies have become highly relevant for the Netherlands (Van der Krabben and Heurkens, 2014). Learning from foreign countries is essential (Aliaj and Shutina, 2012). As Robertson (1991) states that policy lessons from abroad often are put forward as politically neutral truths. Also, the growth in all forms of global communication makes it increasingly likely for governments to look for solutions to new or changing problems in foreign countries (Dolowitz and Marsh, 2000).

A tool that seems to fit in current Dutch invitation planning is the Canadian TIEG system. TIEG stands for Tax Increment Equivalent Grants. By using TIEGs, the Canadian, or better said the Ontario government, tries to trigger companies to (re)invest in their property, by forgiving a part of the increment of the property tax for ten years. The TIEG system is a tool that is meant to stimulate private parties on the market to invest in outdated property. The Netherlands could use this stimulation tool because in this way the government attracts developers to invest in redevelopment and municipalities don’t ‘lose’ money because they give back some of the increment of the property tax which is already paid beforehand.

Since the TIEG system is meant to stimulate private parties to invest in urban renewal, this research has been focused on invitation planning instead of incremental development because invitation planning has the characteristic that the government provokes private parties to invest in properties. Van Baardewijk and Hijmans (2013) state that with invitation planning governments try to actively stimulate and provoke private parties to invest while with incremental development the government makes redevelopment possible but doesn’t stimulate parties to invest in properties. The next paragraph will set out the planning tools a government can use.

1.1 Market-conscious planning

Four basic types of planning tools can be used by a government (Adams, Watkins and Whit, 2005; Needham, 2005 in Chorus, 2012). First are market shaping tools. Those tools shape the decisions of market actors. The second type of tools are market regulating tools. They define the parameters for market actors’ decisions. Third are market stimulation tools that restructure the contours of the decision environment of market actors. And the fourth type of tool are capacity building instruments to develop actors’ capability to identify and/or develop more effective and desirable strategies.

4

Market stimulation is, together with market regulating tools, the most effective tool for achieving the goals of both the public and the private sector (Chorus, 2012). This thesis will focus on market stimulation tools, since the Dutch planning is shifting towards a more market-oriented society. Staley & Scarlett (1997 in: Chorus, 2012) also think market stimulation tools are a good way to combine both the public and the private goals in planning. They mention the following:

‘Planning by the public sector that recognizes the role markets play in coordinating land use changes and limits itself to establishing the rules of the game for market behaviour, offers both greater flexibility and predictability in meeting the needs of society (Staley & Scarlett, 1997, in: Chorus, 2012, p. 39).’

The challenge for the public sector is not to become market actors but rather to realize that they are already market actors, conscious of the market and operate accordingly (Adams & Tiesdell, 2010). Since planning is neither a strict government activity nor a pure market activity, Lai (1994) mentions that there should be a distinction between public planning by planners in the government and private planning of individuals and firms in the market. According to Adams and Tiesdell (2010) the challenge for the public sector is not to become market actors, but rather to realize that they are already market actors, conscious of the market and operate accordingly. Imposed rules and mutual trust (or cooperation) are important coordination mechanisms that cannot be neglected in land use planning (Halleux, Marcinczak, van der Krabben, 2012). Webster and Lai (2003) mention that if the public sector is acting like a market actor, government planners have to be aware that they don’t ignore the strength of spontaneous re-ordering and the interaction between planned and spontaneous order. Spontaneous refers to the ability of economic and political markets to adapt to changes in demand and supply without central planning (Webster and Lai, 2003, in Chorus, 2012).

The statements above are a few reasons that Hoetjes, Bertolini and Le Clerq (2006) and now Chorus (2012) speak about market conscious planning instead of market oriented planning. Chorus (2012) defines market conscious planning in the following way:

‘Market conscious planning seeks to find ways in which the government can help improve the functioning of markets. A possible way of doing this is by giving initiatives and freedom to the private sector, while at the same time representing them with strict requirements regarding the usage of land (Chorus, 2012, p. 39-40).’

A manner to find those ways is by giving initiatives and freedom to the private sector, while at the same time presenting them with strict requirements regarding the usage of land. Market conscious

5

planning has consequences for both the role of the government and the private sector in planning (Chorus, 2012). One of the reasons for this is that government actions are structured by political and institutional realities, market actions are mostly structured by profit. A crucial and distinguishing feature of a market-conscious approach to planning is that it is aware of the actual development opportunities determined largely by market forces, and it uses this knowledge to make the achievement of public goals substantially more feasible (Hoetjes et al., 2006).

1.2 Research goal and question

Since the focus on planning and especially on area development in the Netherlands is shifting towards more market-conscious planning, and the government is forced to fall back on integral development due to lower demand and shortages in land development costs the government has to start looking for (other) financial constructions. Also in light of this integral development, private parties are provoked, through invitation planning, to come up with their own ideas of redevelopment. Private parties won’t invest in properties just because the municipality wants it, so municipalities have to come up with a stimulation tool to provoke the market to invest in redevelopment.

A way to stimulate private parties to invest in urban renewal is to make investments financially attractive pertaining to building from scratch. The Ontario government came up with a financial incentive to trigger those private parties. The incentive, which is called Tax Increment Equivalent Grants, focuses on the increase of the property tax due to the reinvestments in the building. The government forgives a part of this increase in property tax for ten years to stimulate parties to reinvest in urban renewal. This system is unique and seems to be a solution to abolish the financing vacuum on the Dutch land development market.

1.2.1 Research goal

The focus of this research is on the Canadian Tax Increment Equivalent Grant as a financial incentive for redevelopment. The research goal of this master thesis is as follows:

‘To explore a different kind of approach to the funding of regeneration projects, namely the Canadian Tax Increment Equivalent Grants, to investigate if such an approach is applicable in the Netherlands and if it could solve the Dutch problems to fund regeneration projects.’

This goal can be divided in two parts. The first part investigates the working of the TIEG system and in what political context the system is embedded in. This analysis is executed to find out if the TIEG

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system is easy to transfer to the Netherlands, and if there are factors that impede the transfer. The second part analyzes if the TIEG system can be implemented and applied in the Netherlands. This is analysed by using two variables, namely the suitability and the adaptability of the receiving country. Another variable, transferability, is used to analyse the advantages and disadvantages (the pros and cons) of the TIEG system to see how the system works and if it is transferable. These three variables are connected to the three sub questions mentioned in the next sub paragraph.

1.2.2 Research questions and research model

From the research goal above the following research question is distinguished:

Could the Canadian TIEG system be used as a financing instrument in the Dutch invitation planning and what problems would it solve?

To be able to answer the main question, the question is divided into three sub questions:

1. How does the Canadian TIEG system work and what are the pros and cons of the system? 2. What are the similarities and differences in Canadian and Dutch planning?

3. In what circumstances could the institutional transplantation of this system actually work? So what are the opportunities but also the barriers of the process?

The first question has been answered by using the variable ‘transferability’. This variable provides an analysis and an overview of the pros and cons of the TIEG system, as it is used in the Province of Ontario. Chapter 4 also contents an introduction to the Ontario planning system and the working of the TIEG system. The second question has been answered by the variable ‘suitability’, which gives an overview and an analysis of the differences and similarities between the planning systems of the two countries. The third question has been answered by analysing two variables, the transferability of the TIEG system and the adaptability of the receiving country, in this case the Netherlands. These variables will be used to get more insight in the opportunities and barriers of transferring the TIEG system.

The way of how the data for answering the main question were gathered is presented in the following research model (figure 2).

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Figure 2 Research model

As shown in figure 2 the possibility of institutional transplantation of a Canadian financing system has been researched. This system is used in the Province of Ontario and is called the Tax Increment Equivalent Grants system. The analysis has been done using the information gained by literature studies and several interviews with experts in Canada and the Netherlands. This analysis will lead to an answer to the main question that is presented in the conclusion.

1.3 Theoretical and methodological framework

The theoretical focus of this research is on the transplantation of a policy or political program and the belonging learning process. Success and failure factors of Canada cannot simply be transferred to the Netherlands. The two countries are politically, economically and socially completely different so it is a challenge to operationalize the data in such a way that they are comparable but still remain reliable. Institutional transplantation or the borrowing of institutional features from one country to another provides a method for adopting good decision-making ideas from other countries. It is important to be aware of the national regulating style of a country as it may help to explain the way people behave in a country (Chorus, 2012). More specifically it helps provide an insight into the behaviour of the actors involved in the development process of several projects. The theory provides a framework to analyse the possibility of successful transplantation.

The methodology used in this research is case study research. The case in this research is the TIEG system itself that has been analyzed in its country of origin, Canada. In this way, the best and most detailed information about the program and its surrounding (political) context is gathered. Several expert interviews have been held to get more insight in how the Tax Increment Equivalent Grants system works and how it’s practiced in Ontario. When back in the Netherlands also expert interviews have been held to get a clear overview of the Dutch situation. Further information about both countries has been obtained by literature analysis. More information about the theoretical and

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methodological approaches and the advantages and disadvantages of these methods is presented in the theoretical- (chapter 2) and methodological framework (chapter 3) of this research.

1.4 Social and scientific relevance

Since the 1990s, municipalities lost their dominant position in the land market due to the decreasing power of the municipalities and the increasing power of property developers in the land market (Chorus, 2012). Also decentralization of tasks but not of budget doesn’t give municipalities much space to be involved in, or support land development (T. Stauttener, personal communication, July 15th, 2014). The economic crisis also caused a lower demand in houses by the consuming sector and decreased the chances for successful redevelopment projects (Buitelaar et al., 2012), mostly due to financial reasons (van Hoek, Koning and Mulder, 2011). To cope with this reduction in chances, there is a need for effective and smart development strategies that help to take away present obstacles to real estate development and invite the private sector to invest again in urban transformation and renewal (van der Krabben and Heurkens, 2014). The TIEG system can contribute to this need for new development strategies because it can fill up the financial vacuum that has been created as a consequence of changing perspectives on land policy at the (re)redevelopment market in the Netherlands.

The scientific relevance of the research is that it contributes to the knowledge about market-conscious planning and ways to fund urban renewal. The theory about institutional transplantation is tested to see if the Netherlands can make use of market stimulating tools for redevelopment projects. Especially the Tax Increment Equivalent Grants system is used as an example to test the working of market-conscious financial incentives. The research also contributes to other research done, or are being done, in the Netherlands about the opportunities and barriers of the new planning system. Examples are the report on invitation planning and incremental development from PBL and Urhahn Urban Design (2012) and the recent book about foreign experiences of incremental development from Holleman, De Kort and Lindemann (2012).

This chapter contained a brief introduction to the research topic of this thesis. It also clarified the research goal and the research questions. Afterwards a brief summary has been given about the theoretical and methodological framework. And finally the social and scientific relevance has been explained. In the next chapter the theoretical framework and the conceptual model will be described.

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Chapter 2 Theoretical framework

Many countries started looking abroad for solutions for their national problems, for example in planning, to respond more quickly or appropriately to crises (Stone, 1999). Looking at the increasing amount of international contacts and the globalization of politics and governance it is more likely that foreign institutional concepts become more important (de Jong, 1999). No serious scholar would deny that patterns of increased internationalization have occurred and that these have posed significant constraints on the ability of nation states to forward national economic strategies (Evans and Davies, 1999). Some theories regard governments’ learning from competitor states as the result of international locational competition and decreased national policy autonomy (Hoberg, 1991). Yet, countries should consider that foreign policy transfer might lead to more major, discontinuous change in their policies than when they keep within their own policies and institutions (Wolman, 1992).

Another reason to look at examples abroad is because nations cannot solve their problems with their current policy heuristics. Sometimes taking over foreign concepts works out well, even if jurisdictional and cultural consequences are not taken into account. Yet, most of the time, coercive implementation doesn’t work out (Dolowitz and Marsh, 2000). One of the methods to take control of foreign systems is institutional transplantation, or in other words, policy transfer:

‘Institutional transplantation is the borrowing of institutional characteristics from one country by another (de Jong, 1999, p. 37). In other words, it’s the incorporation of knowledge about policies, administrative arrangements, institutions etcetera, from another time and place (Dolowitz and Marsh, 1996, p. 344).

2.1 Institutions

Much has been written about institutions but they still defy clear and concise description. North (1990) calls the them rules of play in a society which limit actions by excluding a wide range of options:

‘The major role of institutions in a society is to reduce uncertainty by establishing a stable (but not necessarily efficient) structure to human interaction’ (North 1990, p. 6).

Institutions are largely historically shaped and they structure the processes of human choice through a number of organized basic certainties (de Jong, 1999). This stable structure significantly reduces the uncertainty created by the complexity of problems and the limited problem-solving capacity of

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the actors. At the same time, these institutions enable us to take alternative routes by pointing clearly in a specific direction.

If the same institutional path is followed for a long enough period of time, past turns limit the scope for further adaptations and the institutional framework can be affected by inertia and inefficient lock-in (Halleux, Marcinczak and van der Krabben, 2012). Accordingly, the insight that future developments are tied to historical experience, binds (formal) institutional developments to a specific time path, and the developing institutional structure of societies is subject to a lock-in or path dependency (Zweynert and Goldschmidt, 2006). At a certain point, this ‘path-dependency’, which has historically preceded current choices, leaves open only a narrow and logical –almost pre-ordained– range of options. Institutional change can thus be influenced or even impeded by path dependency (Van der Krabben and Heurkens, 2014; ).

A way to achieve a better understanding of the interplay between path dependency and politically implemented institutional change is to look at the paradigm of the transplantation of institutions (Zweynert and Goldschmidt, 2006). Institutional transplantation stresses the importance of political competition and the actions of political entrepreneurs on the one hand, and the significance of historical and cultural inertia on the other. The next paragraph will set out the main concepts about institutional transplantation.

2.2 Institutional transplantation

Institutional transplantation, or policy transfer, refers to a process in which knowledge about policies, administrative arrangements and institutions in one time and/or place is used in the development of policies, administrative arrangements and institutions in another time and/or place (Dolowitz and Marsh, 1996). This sub paragraph describes the basic concepts of institutional transplantation.

2.2.1 What is transferred and why?

Almost anything can be transferred from one political system to another, depending upon the issue or situation involved (Dolowitz and Marsh, 2000). Some examples are policy goals, policy instruments, policy programs, institutions and ideologies. Thereby, a main distinction can be made between policy (sub-divided into policy goals, policy content and policy instruments) and programs. There is a wide variety of means of cross-national policy learning, some initiated by a search related to a specific problem, other occurring as a result of more ad hoc and unsystematic ‘environmental scans’ (Wolman, 1992).

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Policy transfer can be either voluntary or coercive. Most authors suggest that the primary catalyst of voluntary transfer is some form of dissatisfaction or problem with the status quo (Dolowitz and Marsh, 1996). Supporters of this dissatisfaction model presume that when governmental policies are functioning properly there is no need to search for lessons; everything can operate through established routines. Only when routines stop providing ‘solutions’ is it necessary to search for lessons. Coercive transfer, in its most direct variant, is the total opposite of voluntary transfer (Dolowitz and Marsh, 1996). With coercive transfer a government forces another government to implement their policy or program. However this is very rare. Another form of coercive transfer, where a government encourages another country to adopt their policy. Hill (1997) adds a third form of transfer. This is when one party within a government tries to make another party to transfer some kind of policy using a range of methods such as persuasion or direction.

Although policy transfer might look voluntary, sometimes it is indirectly not as voluntary as it looks. Globalization and internationalization influence, and might even force, policy makers to establish new economic, political and social structures (James and Lodge, 2003). Wolman (1992) states that policy transfer in general should be seen as encompassing a broad continuum from general concepts to policy tools, to highly specific program design.

2.2.2 How is policy transferred and from where?

Policy transfer is not an all-or-nothing process (Dolowitz and Marsh, 1996; 2000). When engaged in policy transfer, actors have a range of options on how to incorporate lessons into their political system. Four different gradations, or degrees, can be distinct from policy transfer. First is copying, which involves direct and complete transfer. Second, emulation which contains transfer of the ideas behind the policy or program. Third, combinations which involve mixtures of several different policies and fourth is inspiration, whereby policy in another jurisdiction may inspire policy change, but where the final outcome does not actually draw upon the original (see also Rose 1993). It is important to stress not only that the type of transfer will vary between different cases of policy transfer but also that the type of transfer involved in any particular case depends upon factors such as who is involved in the process and where transfer occurs within the policy-making process. Thus, it is possible that while politicians tend to look for “quick-fix” solutions and thus rely upon copying or emulation, bureaucrats, on the other hand, are probably more interested in mixtures (Dolowitz and Marsh, 2000).

The policy transfer can be derived from different levels of governance; international, national and local level (Dolowitz and Marsh, 2000). Within a nation, actors engaging in policy transfer can, and do, draw lessons from other political systems or units within their own country. Not only can

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national units of governments draw lessons from each other, the national government can also draw lessons from lower levels of government, and lower levels of government can draw upon the national government. Governments and agents also transfer policies from one nation to another. Furthermore, while it is seldom examined, it should be stressed that when drawing lessons from other nations, actors are not limited to looking at national governments but can also look to other sub-national levels and units of government. Lastly, lessons can be drawn from, or forced upon a political system by, the international level. Most policy transfers then occur based on patterns of information flows, geographic proximity or linguistic or cultural similarities (Wolman, 1992).

When policy makers start searching for lessons, their own country’s past is the logical place to begin. By searching the past, agents learn not only what has worked but also can learn what not to repeat (Dolowitz and Marsh, 1996). And searching for lessons within a political system’s past has the advantage of saving time and resources. However, while history is constant it is open to many interpretations, current situations have to adapt to changes that occur nowadays. When policy makers want to learn and adopt from foreign policies they have to take into account that ideological and resource similarities are necessary preconditions to draw lessons (Dolowitz and Marsh, 1996). Rose (1993) supplements that similarities are greater within a given program across national boundaries than among different programs within a country.

2.3 Successful transplantation

There are several factors that indicate the ammount of success (or failure) of institutional transplantation. There are factors that indicate the whole transplantation process, factors that indicate the similarities between the hosting and receiving country and other factors that indicate success and failure factors separately for the hosting and the receiving country. This paragraph tries to match these indicators for successful transplantation with theoretical concepts.

2.3.1 Transferability

Policy transfer is dependant upon the transferring political system possessing the political, bureaucratic and economic resources to implement the policy (Dolowitz and Marsh, 1996). There are different aspects which influence the transferability of a policy or program (Rose, 1994). The first is multiplicity. This means that programs with single goals are more transferable than programs with multiple goals. The second aspect is connected with the first because the second hypothesis says that the simpler the problem is the more likely transfer will occur. This variable is than called, simplicity. Third are the similarities; the more direct the relationship between the problem and the ‘solution’ is perceived to be the more likely it is to be transferred. A next aspect is the side effects. Because the

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fewer the perceived side-effects of a policy the greater the possibility of transfer. And with that agents want as much information as possible about how a program operates in another location the easier it is to transfer. This is the fifth aspect; information. Finally is the concept of predictability. Because, the more easily outcomes can be predicted the simpler the transfer of a program can be.

Another factor that can influence the transferability of a certain system or policy is the degree of effectivity en efficiency in the host country. Evaluating the performance of a program or policy in the country from which transfer is being considered is difficult, but very important for the receiving country (Mossberger and Wolman, 2003; Wolman, 1992). If the policy or system doesn’t work well in the host country, why would it work in the receiving country. And above that, if a system isn’t working well in the host country it is less attractive for countries to adapt it because they are mostly looking for successtories.

2.3.2 Adaptability

To be successful, a policy transfer must pass several hurdles (Wolman, 1992). One of them is that it must be capable of adoption through the political system. Once adopted, it must be effective. That means that it must successfully address the problem it is expected to solve in the recipient country. Potential adopters should first identify which problem(s) the policy used to address and the goals associated with a policy or its variations (Mossberger and Wolman, 2003). They should then determine the extent to which these are similar to the problems they face and the goals they wish to pursue. Third, it must be capable of survival (that is of sustained support to enable it to continue to exist and to operate effectively). To be capable of survival al lot of research must be done before a policy of program is transplanted. For example, if a government searches hurriedly for a solution to an urgent problem, it is more likely that there will be transfer because the need for a ‘solution’ is imperative. But it is less likely that the transfer will be successful because limited time will inevitably lead to a limited search for models, and thus probably to flawed transfer (Dolowitz and Marsh, 2000). Similarly, if the search for a policy involves not only politicians and bureaucrats but also interest groups, there will be fewer implementation problems once the policy is transferred. And another aspect is the willingness of the inhabitants that stand behind the ideas of the government to invest in the area.

To make policy transfer as successful as possible, a countries adaptability should be as high and efficient as possible. Halleux, Marcinzak and van der Krabben (2012) explain this concept of adaptive efficiency. By providing insights on the conditions that explain why land use planning in some institutional contexts is able to adapt and improve more efficiently than in others. The grade of adaptive efficiency is, according to Halleux and van der Krabben (2011), also dependent on the kind

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of planning a country practices. The adaptive efficiency standpoint leads to put emphasis on the difference between threats and opportunities (Halleux, et al., 2012). Adaptive efficiency in this article is defined as follows.

‘The willingness of a society to acquire knowledge and learning, to induce innovation, to undertake risk and creative activity of all sorts, as well as to resolve problems and bottlenecks of the society through time’ (North, 1990, p. 80).

2.3.3 Suitability

When a country wants to adapt foreign institutions, or systems, they have to be (or make themselves) suitable for it. The question is whether the various aspects of a policy’s setting in the recipient country are suitable as a host for policy which has operated in the different setting of the originating country (Wolman, 1992). A way to investigate if a country is suitable for adaptation of a new institutional system is to look at their political history and political environment. Important aspects of a policy’s environment include its institutional and structural setting, the national political culture, public opinion, relationship to other policies and the country’s level of economic development wealth and economic structure (Wolman, 1992).

Policy transfer, and the success of the transfer, is more likely if the policy is consistent with the dominant political ideology in the ‘host’ country (Robertson, 1991). Certainly, ideological similarities between countries can be a key factor when actors look for lessons (Rose, 1994). The similarities between the hosting and the receiving country can be analyzed using the concept of families of nations. A family of nations consists of countries with similar legal styles and/or cultural value orientations (de Jong, 1999). Families of nations can be helpful to obtain compatibility indications. Transplants, however, do not necessarily have to be derived from a country in the same family. Although the institutional designer must be aware of possible complications that may arise after adoption (de Jong, 1999). Any change in institutional elements in a certain country, must fit both structurally as well as culturally. Orücü, Attwooll and Coyle (1996) say that the characteristics of a family cannot arise out of substantive rules of law, but must be related to the structural and philosophical roots of the families. The borrowing of the rules and provisions, even the principles and standards of another legal system that is not crucial. What is crucial is the borrowing of a mode of thought and the handling of the law, its structure and sources.

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2.4 Transplantation failure

There are a lot of factors that can lead to transplantation failure (Radaelli, 2000, Dolowitz and Marsh, 2000). First, the borrowing country may have insufficient information about the policy/institution and how it operates in the country from which it is transferred: a process called uninformed transfer. When policy makers go abroad to learn about a system they only see what they are shown (Wolman, 1992). They might have seen only ‘show-case examples’ instead of average situations, which can lead to transplantation failure. Second, although transfer has occurred, crucial elements that made the policy or institutional structure a success in the originating country may have not been transferred, what will lead to failure. This is called incomplete transfer. Third, in the case of inappropriate transfer, sufficient attention regarding economic, social, political and ideological differences between the transferring and the borrowing country leads to failure. Another frequent reason for unsuccessful policy transfer is the effort to transplant a policy that was intended to serve one purpose in the originating country, to serve other ends in the borrowing country (Mossberger and Wolman, 2003). So policy makers should pay attention and get the most accurate and adequate information about the foreign policy or program.

2.5 Institutional transplantation in this research

In this research the theoretical focus is on the institutional transplantability of the TIEG system. Although the institutional transplantation theory doesn’t provide specific variables that measure successful transplantations, variables can still be distinguished from the theory. These variables are transferability, adaptability and suitability. The degree of transferability depends mostly on how the policy works in the hosting country. This includes what problems the policy intented to solve, how complex the policy is and how much information is available about the policy. Second is the adaptability of the receiving country. This variable analyzes if the receiving country has the resources and capability to adopt the transplant and third is the suitability which means that the receiving country has to be suitable for the transplant. The institutional transplantation theory has been used to find out if the Canadian TIEG system can be transplanted to the Netherlands to solve the Dutch problems to fund regeneration projects.

2.6 Conceptual model

In this research, three independent variables have been analyzed to see how they influence the ammount of success a the transplantation of the TIEG system could have. Those three variables are

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transferability, adaptability and suitability. Figure 3 shows the relation between the dependent and the independent variables.

Figure 3 Conceptual model

In the last centuries, the idea that causality is fundamentally a matter of regularities in our data was dominant (Salmon, 1989). The National Research Council (2002) quotes that causal explanations are about systematic effects rather than single events. This suggests that causal relationships can only be demonstrated through quantitative research. Salmon (1989) even states that causality is ‘unobservable’. Yet, due to several reasons, this research is suitable for qualitative research (see chapter 3). According to the two quotes above it assumes to be impossible to show causality between the main variables and successful transplantation. Nevertheless, the National Research Council (2002) admits that some research seeks to achieve a deep understanding of particular events or circumstances rather than quantitative understanding that will generalize across situations or events. Even some qualitative methods are extremely suitable when it comes to understanding complex social phenomena (Yin, 2003).

Institutional transplantation can be seen as a complex phenomena. Successful transplantation doesn’t only depend on the transferability of the system, and the adaptability and suitability of the receiving country. The transferability of planning successes is often confronted to overwhelming contextual obstacles (Dolowitz and Medearis, 2009). And most phenomena cannot be explained in isolation, which is a result of their complexity in reality (Maxwell, 2004). Those three variables are a simplification of all the variables that influence the success of institutional transplantation. Other variables that influence the process are for example, implementation costs and technological abilities (Robertson, 1991) and path-dependency (Halleux et al, 2012; Zweynert and Goldschmidt, 2006).

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This research recognized these other variables and named them but treated them as constant variables. This research has investigated how the variables transferability, suitability and adaptability, which are considered the most important in this research, influenced the transplantation.

This chapter contained an explanation of the theoretical framework that is used in this thesis. The framework consisted of a part that explained the concept of institutional transplantation, or policy transfer, and a part on factors that could indicate the amount of success of institutional transplantation. Finally, a conceptual model has been developed to explain the causalities in this thesis. The next chapter examines the methodological framework.

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Chapter 3 Methodological framework

This thesis investigates the possibility of transplantation of Tax Increment Equivalent Grants – a financial incentive for (re)development projects in the Province of Ontario, Canada – to the Netherlands. Specifically this research is about the question if this way of funding redevelopment projects can be successful in Dutch cases. Desk research, interviews and empirical research have been used to collect data for the analysis of this research. Several expert interviews have been held to get more insight in how the Tax Increment Equivalent Grants system works and how it is used in Ontario. Also Dutch experts have been interviewed to get their opinion of the system and if a tool like TIEGs would work in the Netherlands. The used case study is further introduced in paragraph 3.4.

3.1 Operationalization

As already set out in the former chapter the theory about institutional transplantation is used to explore if the Ontario TIEG system can be transplanted and implemented in the Netherlands. To analyze if this transplantation can be done successfully, three variables are used. Those variables are transferability, suitability and adaptability. This sub paragraph operationalizes those three variables. As a matter of course other variables and externalities influence the amount of success of transplantation.

3.1.1 Transferability

The first dimension that has been analyzed is transferability. Transferability in this research is translated in advantages and disadvantages of the TIEG system. When having a clear overview of the advantages and disadvantages, a conclusion can be formed about the transferability of the TIEG system. If the system has a lot of advantages, it is more likely for the TIEG system to be transplanted. If there’s too many disadvantages to the system, it is less likely the system is transferable. Besides that, the context plays an important role in the transferability of the system.

3.1.2 Suitability

The final dimension that has been analyzed is suitability. This variable analyzes the differences and similarities between the planning systems of the two countries. The similarities and differences analysis is divided in four categories, or sub variables. The more similarities between the two countries, the higher the chance for successful transplantation. The first sub variable is history and politics. This variable tries to describe how politics have evolved over time in both countries. The second sub variable is planning objectives. If planning objectives match it is more likely that policy